Dubai exchange delays launch of plastic futures contracts

05 February 2009
Dubai Gold and Commodities Exchange (DGCX) has postponed the launch of its plastics futures contracts, after requests for more time from industry participants.

The linear low density polyethylene (LLDPE) and polypropylene (PP) futures contracts for the Middle East and South East Asia had been due to launch on 5 February, but have now been suspended until further notice.

“We have postponed the contracts for the time being based on feedback from the industry,” a DGCX spokeswoman says. “We do not have a new launch date at the moment but we are continuing to work closely with participants to launch the contracts when the industry is ready.

“Many of the companies which have been integral to the development and design of the contracts requested a delay in order to ensure that the contracts are introduced at the right time and so that they can be fully ready to start trading. Several companies are still readying themselves and this delay will allow them to participate from day one.”

Commodities brokers in the region attribute the request for a delay to a slowing local and international market for plastics.

“They are wondering if this is the right time to launch plastics contracts,” says a source at one international commodities brokerage in the UAE. “They aren’t sure what impact it would really have on the market. Some of the most volatile and liquid [local] commodities are pretty quiet at the moment.”

However, the spokeswoman says the delay is not related to issues related to commodities trading in general or the plastics contract specifications.

The London Metal Exchange launched a similar contract in 2005 for Asia, Europe and North America. Commodities traders in Europe say that the volume of trading on the exchange has been lower than anticipated.

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